Feb 10 (Reuters) – Cleveland Federal Reserve Bank President Beth Hammack said on Tuesday that the U.S. central bank faces no urgency to change its interest rate setting this year amid a “cautiously optimistic” outlook for economic activity.

Given the likely outlook, “we could be on hold for quite some time” when it comes to setting the central bank’s target range for interest rates, Hammack said in the text of a speech prepared for presentation to the Ohio Bankers League in Columbus, Ohio.

“I think we’re in a good position to keep the funds rate at that level and see how things play out” with monetary policy most likely in an environment that neither slows nor boosts economic activity, he said.

“Rather than trying to adjust the funds rate, I prefer to err on the side of patience as we assess the impact of recent rate cuts and monitor the performance of the economy,” Hammack said, adding, “a stable funds rate would reflect positive economic developments.”

Hammack, who has voted in this year’s Federal Open Market Committee on interest rate setting, said he supported the central bank’s decision to keep its target range of interest rates steady at 3.5% to 3.75% at the end of January.

The Fed cut its target by 75 basis points last year as it sought to boost a softening labor market while maintaining enough restraint to return inflation to the 2% target it has outpaced for years.

Hammack has been skeptical of rate cuts given the state of inflation dynamics. Fed officials have targeted rate cuts for this year, but have given little guidance on timing in recent comments.

It is highly likely that rate cuts could re-emerge as an issue if Kevin Warsh is confirmed to succeed Jerome Powell as Fed chairman when the current leader’s term ends in May. President Donald Trump has aggressively pressed the Fed to cut rates and has said a desire for aggressive easing would be a key thing he would want from any Fed leader.

In his comments, Hammack noted that the economic outlook is bright, but at the same time, he noted that inflation remains “too high” and said it was important for price pressures to ease amid the risk that it could be stuck at around 3% this year.

“Growth this year should be boosted by easier financial conditions, recent interest rate cuts and fiscal support, among other factors,” Hammack said.

In terms of hiring, the information points to some stability at the moment. “Both the official data and what we’re hearing from companies point to a ‘low-hire, low-fire’ environment where companies aren’t adding a lot of workers, but they’re also not firing a lot,” Hammack said.

(Reporting by Michael S. Derby; Editing by Andrea Ricci)